MPPs want to end postal code ‘discrimination’

Two Ontario MPPs introduced private member’s bills recently which are aimed at stopping auto insurance companies from charging drivers higher premiums based on where they live.

The bills were introduced October 16 by conservative MPP, Parm Gill of Milton, Ontario, and by NDP auto insurance critic, Gurratan Singh of Brampton East.

Gill’s bill seeks to amend the Automobile Insurance Rate Stabilization Act, 2003 by rescinding Bulletin A-01/05 which sets out factors to be included in risk classification systems of insurers under that Act. It also seeks to amend the Insurance Act, Regulation 664, to prohibit insurers from using postal codes or telephone area codes in a company’s risk classification system.

Singh’s bill seeks to amend the Insurance Act to prevent residents from the Greater Toronto Area (GTA) from paying higher rates for automobile insurance based solely on the municipality or area in which they reside. The amendment would require the Superintendent of Financial Services to refuse to approve risk classification systems if the system considers geographic regions or if it fails to consider the GTA as a single geographic area. The amendment also prohibits insurers from entering into contracts of insurance if rates are determined based on such a risk classification system.

IBC consulting members

Pete Karageorgos, Ontario director of consumer and industry relations with the Insurance Bureau of Canada (IBC) says the industry association is currently consulting with members and with government to see what impact the bills might have.

“Typically, many private member bills don’t make it into law. What you might see happen, if it’s a government private member’s bill, sometimes the government takes it over or includes it with something else. There’s the potential of having it included with legislation.”

Geography, he points out, is just one factor insurance companies could look at when determining premiums. Using usage-based insurance (UBI) or telematics to determine a client’s premium is just one area where insurers would like to evolve, given the opportunity. “Everyone wants to be able to do that. However, unfortunately, the government hasn’t updated regulations to allow for that type of innovation.” (Currently he says telematics can be used to offer discounts, but can’t be used to set premiums in Ontario.)

Regulations need updating

“There are a lot of regulations that need to be updated. They’re stale. This really is and acknowledgment that some things need to change,” he adds.

“We’ll wait and see, moving forward, what impact these bills will have. I think the bigger picture and the bigger discussion, more importantly, is how this new government is going to reform, or what changes they’re going to make to make auto insurance more affordable.”